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Competitive Analysis

The document discusses competitive analysis and provides tools to analyze competitors. It recommends researching competitors' market share, intellectual property, and financial performance. Two tools are described: 1) A competitive grid that assesses competitors against key customer purchase reasons on a scale. This identifies strengths to focus on. 2) A perceptual map that plots competitors on axes of purchase reasons based on customer surveys. This shows competitor positioning to identify opportunities. The tools help optimize positioning and marketing messaging versus competitors.

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joannmacala
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128 views

Competitive Analysis

The document discusses competitive analysis and provides tools to analyze competitors. It recommends researching competitors' market share, intellectual property, and financial performance. Two tools are described: 1) A competitive grid that assesses competitors against key customer purchase reasons on a scale. This identifies strengths to focus on. 2) A perceptual map that plots competitors on axes of purchase reasons based on customer surveys. This shows competitor positioning to identify opportunities. The tools help optimize positioning and marketing messaging versus competitors.

Uploaded by

joannmacala
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Competitive Analysis

Knowing more about your industry and your potential customers than your competition can be a highly
leverageable strength and provide you with a decided advantage in the marketplace.
Competitive strengths (and of course weaknesses) can be assessed in several different areas: strength in
industry sales (ie: market share), intellectual property strengths (ie: proprietary processes or patents,
trademarks) or financial strengths. Information regarding each competitors performance in each of these
areas can be obtained online at a variety of KU library electronic data bases or at publicly available sources
(ie: Yahoo finance: input your primary publicly traded competitor, then click on competition and a
competitive comparison of sales, share and financial achievement is readily available. You may have to
factor the results for competition in your geographic area or product offering if you expect to compete
locally or with an abbreviated product/service offering).
You will want to identify all of the primary competitors who are currently selling their products/ services in
your industry (as defined above). And youll want to research:
Approximate size of each competitive brand in terms of sales or market share (if possible, this may
be difficult to obtain)
Features (what the product offers) and benefits (what the consumer gets by using that product) of
each competitive entry.
The way in which the product/service reaches the customer (ie: the channel of distribution). For
example: Is the product/service just sold at retail or via online as well? How does the product reach
the retail outlet, directly from the manufacturer or through a wholesaler?
Retail price of the competitive brand (what the consumer pays) and the wholesale price of the
competitive brand (if there is a retailer involved, this is the price the retailer pays to the
manufacturer).
You will want to be able to demonstrate how your product/service compares to key competition as well as
the opinions and perceptions of potential customers. To achieve these insights, two approaches can and
should be used in the formation of your business plan.

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A. Competitive Analysis: The Competitive Grid


Illustrated immediately below is a Competitive Grid which provides a means of evaluating your new
ventures offering vs. that of key competition in the industry in which you will be competing.
This Competitive Grid should be included in the Industry/Competitive Analysis section of your business
plan.
Your
Offering/Key
Competitors
Your New
Venture
Competitor A
Competitor B
Competitor C
Competitor D
Totals

Primary Reasons for Customers to Purchase Products/Services in this Industry


Reputation
Variety
Location
Uniqueness
Customer
Totals
Service

Directions to completing the competitive grid are below.


1. Determine who your competitors are. They will be firms offering similar products/services or if you believe
that no competitor offers a similar product/service, you should include as competitors those companies whose
products/services are used by your target customers to satisfy the same problem that your product/service
addresses.
2. Determine the primary reasons target customers purchase products/services in this industry. There may be
many reasons but typically there are 4-5 primary needs/wants which figure prominently in the customers
selection of the product/service they will purchase to satisfy that need/want. In the example above, the
primary reasons cited are those which might be prominent in a customers selection of a place to eat. These
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reasons may or may not be representative of the primary reasons to purchase in your industry select the
ones which you believe are the primary drivers of customer purchase behavior in the industry in which you
compete.
3. Complete the chart by assessing, on a 1-5 point rating scale (5 is highest), how well each competitor and your
offering delivers against each primary reason for purchase. Ideally this assessment is based on actual
potential customer feedback, as you would obtain in a potential customer survey by asking how well each
competitor delivers against each key reason for purchase based on their experience. Since the potential
customers will not have had an opportunity to experience your new product/service you can obtain their
projected reaction by exposing them to your product/service concept in the survey research identified above.
4. Having potential customers provide their assessment of the competitive offering and your new
product/services conceptual offering is the most accurate approach. However, if you are unable to conduct
this survey you can insert your own assessment of each competitors performance for each reason for
purchase, again on a 1-5 point rating scale. If you pursue this approach you must be brutally honest in your
appraisal of each competitor and most importantly how your offering will perform against each competitor for
the purchase reason.
5. When completed, add up all of the totals. The vertical totals will tell you how important each reason for
purchase in this category is relative to the other reasons for purchase and therefore identify those areas in
which you must focus your product/services ability to deliver, that is performing well against the highest
rated reason for purchase will produce more overall customer appeal and ultimately sales than performing
well in a purchase reason of lesser overall importance. The horizontal totals will tell you how well your offering
is projected to perform against each of the competitors. With these vertical total results you should: work to
improve your products/services projected performance in the deficit areas and/or reflect the inferior
performance in a lower price than the better performing competitor in order to balance performance vs.
price , the key value equation used by most customers when making the purchase selection. Before you opt
for lowering your price, however, remember that a primary purpose of your business is to be profitable and
lowering the price to make up for a performance deficit is antithetical to that mission.

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B. Competitive Analysis: Perceptual Map


Another approach to identifying the relative strengths and weaknesses of competitors in your industry
utilizes a perceptual map. In this approach, customers are asked to position each competitor along an axis
according to how well the customer believes that competitor performs. The axes can be the same ones
used in the Competitive Grid tool, above, simplified to use only two of the primary reasons for purchase
(two axis producing a four quadrant chart) or including as many reasons for purchase as are relevant to
Using the Two Axis Format,
purchases in this industry (the radar chart format). Both formats are illustrated as:

Two Axis Chart Format:


Reputation (+)

Variety (-)

Variety (+)

one is able visualize how each


competitor is perceived as
performing on the selected
variables of Reputation and
Variety. In this example, the
circle Competitor is perceived
by customers from survey
results to be both positive and
superior to its circle X
competition for both reasons
for purchase but inferior to the
star competitor for Reputation.

If you were the circle


competitor, you might
consider stressing variety in
your marketing messaging,
and de-emphasizing reputation
in order to better compete.

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Reputation (-)

Radar Chart Format:


The radar chart is slightly
more complex but then it
40
shows more useful information
regarding perceived
20
competitive
Cust Svc
Variety
strengths/weaknesses and
which of the primary reasons
0
to emphasize in its marketing
messaging. In this example,
your service is perceived
superior at variety and
location so those attributes
Uniqueness
Location
should be emphasized while
Your Svc
Comp A
Comp B
competitor A is perceived via
customer surveys to be better
at customer service. You would
wantusing
to improve
yourmethodology as described
The information populating both chart displays is obtained
the same
perceivedsurveys
customer(the
service
earlier in assembling the Competitive Grid: use either customer
optimal approach) or your
capabilities
o
improve
your
own best honest guess at both your expected performance on each reason for purchase as well as that of
overall performance and gain
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increased customer attention
Reputation

and sales.

each of your competitors. Both chart formats are relatively simple to construct using an Excel spreadsheet
to record and translate the data to the desired format.
The perceptual map is very useful for identify the optimal positioning of your new product/service offering
vs. that of key competitors. By mapping each competitors strengths and weaknesses you can select the
optimal positioning for your service (ie: where no competitor is currently positioned) and make sure to
emphasize that positioning in your marketing messaging. As a result, the perceptual map is a good
addition to your marketing plan section of the business plan to substantiate the selected positioning of
your new product/service.

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